Interest on Delayed Refund

The interest amount is based on when the tax was paid and when the return was submitted. In many cases, the interest is determined from the date of filing or date of tax payment (whichever is later) until the day the refund is released to the taxpayer’s bank account.

However, taxpayers must note that if the refund amount is less than 10% of the total tax paid during the year, then interest is not paid.

Taxpayers are entitled to interest on delayed refunds, but under some conditions. If the ITR is filed within the due date, the interest will be paid from April 1 of the relevant AY till the refund is given. If the return was filed late, interest is counted from the filing date.

Additionally, the interest will be paid only if the delay is not due to the taxpayer’s fault, like wrong bank details or unanswered notices.

Why is There Delay in Processing Returns?

Even though a large number of returns have already been processed, the number of pending returns is higher than usual. Here are some key reasons behind this delay:

• Mismatch in details: When there is a mismatch between the ITR data and the information in Form 26AS, AIS, the income tax department conducts extra checks, which delays the processing of the return.
• Income tax portal issues: Updates and slow performance of the e-filing portal affect the return processing.
• High refund claims: Returns showing large refund amounts require extra verification, which slows down the processing.
• Complex Income: If the taxpayers have complex income like capital gains, multiple income sources, or large deductions, their return takes more time to process due to extra checks.
• NUDGE Campaign: The CBDT introduced its NUDGE (Non-intrusive Usage of Data to Guide and Enable) campaign in November 2025, allowing the taxpayers to report foreign assets and investments.
• Late release of ITR forms: Income tax return forms were issued later than usual, reducing the time available for processing.
• Bank account not validated: Refunds cannot be issued if the bank account is invalidated.
• Extended filing deadline: The due date for filing the return was extended, leading to many returns being filed at once and creating a backlog.

Who Receives Refunds Faster?

People with simple incomes usually receive refunds faster. However, those who have claimed larger refunds or reported deductions that are not supported by the employer record face late refunds. Senior citizens and taxpayers with complex income details may also experience slower processing.

What to Do?

Experts advise taxpayers to stay calm and check a few important things. They should ensure their return is verified, bank details are correct, income details match official records, and any notice from the tax department is answered on time.